Coursehero >> Other International >> Prince Sultan University >> MBA ECON Course Hero has millions of student submitted documents similar to the one below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support. ___________________________________________________________________________ 1. A Ch3 Student: firm will maximize profit by producing that level of output at which A. the additional revenue from the last unit sold exceeds the additional cost of the last unit by the largest amount. B. the additional revenue from the last unit sold equals the additional cost of the last unit. C. total revenue exceeds total cost by the largest amount. D. total revenue equals total cost. E. both b and c 2. The function a decision maker seeks to maximize or minimize is the ________ function. A. optimal B. decision-making C. objective D. marginal E. none of the above 3. Choice variables A. determine the value of the objective function B. determine the constraint C. can only take on integer values D. cannot be continuous E. both c and d 4. For an unconstrained maximization problem A. the decision maker seeks to maximize net benefits. B. the decision maker seeks to maximize total benefits. C. the decision maker does not take cost into account because there is no constraint. D. the decision maker does not take the objective function into account because there is no constraint. E. none of the above 5. When marginal cost is greater than marginal benefit at the current activity level, the decision maker can increase net benefit by decreasing the activity because A. B. C. D. total benefit will rise by more than total cost will rise. marginal cost is rising faster than marginal benefit is falling. net benefit is upward sloping at this point. total cost will fall by more than total benefit will fall. 6. For a constrained minimization problem, the decision maker A. is constrained by the specific amount of total benefits. B. is constrained by the choice set of values for the activities. C. seeks to minimize the cost of achieving a specific goal. D. all of the above E. none of the above 7. A continuous choice variable A. must be continuously varied to attain the goal. B. can take on only special values between two end points. C. is in unconstrained but not constrained problems. D. all of the above E. none of the above The next 3 questions refer to the following: An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency decides to hire operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls). 8. If operators receive $25 an hour, how many operators should the agency hire? A. 0 B. 1 C. 2 D. 3 E. 4 9. If operators receive $25 an hour, what is the minimum possible total cost of personal calls (per hour)? A. $460 B. $255 C. $120 D. $85 E. none of the above 10. What is the most the agency would be willing to pay the first operator? A. $480 B. $300 C. $240 D. $120 E. none of the above The next 3 questions refer to the following figure, which shows marginal benefits (MB) and marginal cost (MC) of activity A. 11. If the decision maker is choosing 200 units of activity A, A. this level maximizes net benefits. B. the activity could be reduced by one unit and net benefits will increase by $10. C. the activity could be increased by one unit and net benefits will increase by $10. D. the activity could be increased by one unit and net benefits will increase by $25. E. the activity could be reduced by one unit and net benefits will increase by $15. 12. If the decision maker is choosing 400 units of activity A, A. this level maximizes net benefits. B. the activity could be reduced by one unit and net benefits will increase by $10. C. the activity could be reduced by one unit and net benefits will rise by $25. D. the activity could be increased...

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...terms of x.
6. A manufacturing process costs RM 6500 to set up for one year’s use. If items cost RM 85 each to produce and other costs amount to 3.5 x2, where x is the production in hundreds, find the level of production that will minimise the cost per item over the year. What will the total cost amount to at this level of production?
7. The marketing department of Spager Ltd estimated that if the selling price of product is set at $15 per unit then the sales will be 50 units per week, while, if the selling price is set at $20 per unit, the sales will be 30 units per week. Assume that the graph of this function is linear. The production department estimates that the variable cost will be $5 per unit and that the fixed cost will be $50 per week, and special cost are estimated as $0.125x2, where x is the quantity of output. All production is sold.
(a) Show that the relationship between price (Pr) and quantity sold (x) , are given by the equation Pr = 27.5 - 0.25x.
(b) Find the revenue function, R.
(c) Find the total cost function (C).
(d) Advise the company on production and pricing policy if it wishes to maximize profits, and find the maximum profit.
8. A firm receives £135 for each unit sold. The costs consist of a fixed cost per month of £2500 and variable...

...Consumers need to determine if they should make or reject a certain decision by using marginalcosts or benefits. Marginalcosts refer to the change in cost over the change in quantity while marginalbenefits refer to the change in benefits over the change in quantity (“MarginalCosts &amp; Benefits”, n.d.). When it comes to a decision in purchasing a home, the strength of the economy could affect the marginalcosts and the marginalbenefits. During the times of economic growth, the consumer who purchases a new house might feel that they have made a good decision because this will allow them to live in an enjoyable and comfortable environment. During these periods, consumers feel that they do not have to worry about their mortgage or spending since they are optimistic about the economy’s situation because they feel that the marginalbenefits overpowers the marginalcosts. But then again, the consumers might feel that purchasing a new home during the times of recession is a bad choice because they are worrying about getting retrenches and they would also prefer to save money at that moment. When this happens, the consumers will feel that the marginalcost overpowers the...

...Marginal Revenue and MarginalCost
An understanding of marginal revenue and marginalcost is economically crucial to owning and operating a successful business. Marginal revenue is the amount of change in total revenue by selling one additional product. So if a company sells four extra unit of product and brings extra total revenue of 500 dollars than the marginal revenue for this month would be 125 dollars. This is found by taking the change in total revenue, 500 dollars, and dividing it by the change in quantity, 4 units of product. This gives you the marginal revenue which can help a company understand what each unit is worth and how much they will be making for each extra unit.
Marginalcost is how much it cost the company to produce one more product. A company calculates the marginalcost by taking the change in total cost and dividing it by the change in quantity. If it cost a company 400 dollars to produce eight units and it cost a company 425 dollars to produce nine units than the marginalcost for making product nine is 25 dollars.
Finding a profit and understanding when you are earning a profit is crucial because this defines how much your company with gross every month. To find the profit you...

...principals of decision making:
People face trade-off
The cost of something is what you give up to get it
Rational people think at the margin
People respond to incentives
The first principle can be summarized with the following phrase “There’s never a free lunch” every time that you need something you have to give something in return. One example is an employee that needs a particular day off. He could just miss work and not get paid or ask for a change of schedule and not miss work. This allows flexibility or compromise between parties.
Previous to making any decisions on the trade off you should always consider the cost. At times the cost of some actions may not be apparent at a glance. The cost of any given project may reflect on the outcome of your decision.
Never assume that everybody is rational. Rational people rarely decide in black and white but for the most part their decisions are in the gray area. As you go deeper into economics, you will encounter firms that decide how many workers to hire and how much of their product to manufacture and sell to maximize profits.
Incentives, who doesn’t like a positive incentives? Keep in mind that if there is positive incentive there can also be negative ones. Rational people will always keep in mind the cost and benefits of a project and they will respond to the incentives provided for the completions of given task.
An example of...

...﻿Hi Jacqueline, Professor and class
You were able to deliver a great post easy to comprehend. Regarding the topic this week, you’ve mentioned the fact that the number of goods that a firm is manufacturing is in direct connection with the marginal product. Sometimes, less is more and less employees using the right equipment and technologies are able to perform much efficient that a greater number of employees that are using old tools in their activity. .
As you well said,marginalcost and marginal product are strongly connected. When the value of the marginalcost is dropping, the value of the marginal product is raising and vice-versa. The quantity of the inputs can’t be changed at one time so managers tend to keep some of the inputs at a constant level. As every manager is looking to earn and increase profit, it is very important to calculate and determine the level at which the rate of profit is going to reach a maximum value. (www.ag.ndsu.edu).
Considering that you’re working as a manager and get across a negative value for the marginal product of labor, what would you consider the cause might be?
References
Diminishing Marginal Productivity — NDSU. (n.d). NDSU Agriculture — NDSU. Retrieved September 22, 2013, from http://www.ag.ndsu.edu/aglawandmanage
Hi Lisset, Professor and class
Thanks a lot for your feedback. You were...

...Explain how the strength of the economy as a whole could affect the marginalbenefits and the marginalcosts associated with a decision to purchase a home.
How does the removal of the tax deduction on mortgage interest affect the housing market?
The strength of the economy as a whole could affect the marginalbenefits and the marginalcosts associated with a decision to purchase a home. Here's how. When the economy is growing, a consumer may feel that the purchase of a house is a good decision to make, because it gives them exactly what they desired. Which is a house that suits there needs. In this process the consumer is not thinking about what he or she would have to spend on a mortgage. They would be expecting the economy to grow not fall. Therefore, he or she may feel that the marginalbenefits are greater than the marginalcosts. When the economy falls and there is a recession the consumer may feel that the decision to buy is all wrong. Marginalcosts refer to the change in cost over the change in quantity. Marginalbenefits refer to the change in benefits over the change in quantity. This causes a preference to save money or not to spend at certain periods of time.
The removal of the tax deduction on mortgage...

...decisions is when to buy new machines or equipment or upgrade the machines or equipment that the business already has. Using analysis of the needs of the business and how the new equipment will help the business to function and the cost of the product will determine what the managers of the business decides.
Marginalcosts are change in total costs divided by change in output. Marginal revenue is the change in total revenue divided by change in output. Increase in fixed costs means that when the fixed costs cannot be changed it is the short run and when the fixed costs change it is the long run.
The second questions that I chose to answer was the following: A managerial decision I recently had to make which required a complete review of the economic considerations involved whether to transition into a digital format with our portable x-ray machines by performing transformation upgrades to both existing analog units or to trade them in and use their value to offset the total price incurred by the purchase of new units.
Value Considerations
Current Value of analog systems:
Flat value: $12,000 ea
Intrinsic value:
Exams (units)/day: 8.5
Average revenue/unit: $65.00
$553/day X 365 = $201845/year
Cost Consideration #1:
The cost to upgrade (2) GE AMX 4 Plus Portable X-ray Units is $88,000 each. The upgrade...